Company Coverage
Longfor Group (960 HK): 1H26: Expect Postive Bottom Line In 2027 And Back To Stable Growth Trajectory By 2028
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
HK$91.95
HK$150.00
+63.1%
HK$135.00
Analyst
Analyst
Highlights
1H26 core net profit fell 95.4% yoy to Rmb64m, in line with the Rmb50m 100m profit warning. Recurring profit grew 4.2% yoy to Rmb6.7b.
Management expects Longfor to report positive core net profit in 2027 and return to stable growth trajectory by 2028. The Rmb2.5b debt maturity in 2026 will be well covered.
Maintain BUY, lower target price to HK$8.76.
Analysis
1H26 results continued to be dragged by property development (PD). Core net profit fell 95.4% yoy to Rmb64m, in line with the guided range of Rmb50m-100m; attributable net profit of Rmb1,961m (-39.0% yoy) was flattered by a Rmb3,006m revaluation gain. PD revenue fell 42.6% yoy, while PD EBITDA margin declined 13.2ppt yoy. Recurring revenue grew 3.2% yoy, while EBITDA margin improved 2.4ppt to 44.1%. SG&A ratio rose 1.4ppt yoy to 6.9% on a smaller revenue base, while interest expense dropped 15.4% yoy with the average funding cost at 3.36% (1H25: 3.58%). The company declared no interim dividend, as expected.
Highlights
1H26 core net profit fell 95.4% yoy to Rmb64m, in line with the Rmb50m 100m profit warning. Recurring profit grew 4.2% yoy to Rmb6.7b.
Management expects Longfor to report positive core net profit in 2027 and return to stable growth trajectory by 2028. The Rmb2.5b debt maturity in 2026 will be well covered.
Maintain BUY, lower target price to HK$8.76.
Analysis
1H26 results continued to be dragged by property development (PD). Core net profit fell 95.4% yoy to Rmb64m, in line with the guided range of Rmb50m-100m; attributable net profit of Rmb1,961m (-39.0% yoy) was flattered by a Rmb3,006m revaluation gain. PD revenue fell 42.6% yoy, while PD EBITDA margin declined 13.2ppt yoy. Recurring revenue grew 3.2% yoy, while EBITDA margin improved 2.4ppt to 44.1%. SG&A ratio rose 1.4ppt yoy to 6.9% on a smaller revenue base, while interest expense dropped 15.4% yoy with the average funding cost at 3.36% (1H25: 3.58%). The company declared no interim dividend, as expected.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
HK$91.95
HK$150.00
+63.1%
HK$135.00
Analyst
Analyst
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